The First Half of 2016 Listed Banks Results Analysis
Based on analysis of key players' performance in the first half year of 2016, our latest banking study provides insights into the overall development of Chinese banking industry.
There were no significant changes to the global economic slowdown during the first six months of 2016: macroeconomic policies remained divided among key economies, “Brexit” aggravated uncertainty and a number of downside risks remained. Meanwhile, the Chinese Government continued to implement proactive fiscal policy whilst the Central Bank maintained a prudent monetary policy using flexible monetary policy tools to strengthen the pro-cyclical fine-tuning of the economy. The Chinese economy maintained relatively smooth and steady progress with stability in the main economic indicators.
During the first half of 2016, Chinese listed banks faced a number of challenges, including interest rate liberalization, new modes of finance, financial disintermediation and intensifying competition. The interest rate changes and further narrowing of net interest margins due to the replacement of business tax with value-added tax had an adverse impact on profitability. How to effectively deal with the narrowing of interest rate and transaction spreads has become a common challenge for commercial banks.
Currently, there are more than 20 listed banks (A and/or H) in the market. Our report analyzes the 2016 interim results of five State-owned commercial banks and eight nation-wide Joint Stock commercial banks and shares our observations on their financial reporting and management discussions for the first half of this year.
The dominant asset size and profit levels of these 13 banks provides a good proxy for all listed banks, allowing us to examine the key challenges faced by the Chinese banking industry.
This report is available in Simplified Chinese only.